So here is some hard data on Google and Google news, courtesy of the eminent Timothy Jordan. . .

Some numbers,
-We send news publishers more than 4 billion clicks each month: 1
billion clicks from Google News and an additional 3 billion from
services like web search and iGoogle. That’s about 100,000 business
opportunities we provide publishers per minute.
-Google News now includes articles from more than 25,000 news sources
in about 30 languages and more than 70 editions. Among these, more
than 5,000 are English language news sources. Users find the news
they’re looking for, discover new editorial voices and try out news
sites they may never have seen otherwise.
-A survey in December 2008 showed that 40% of American Internet users
get most of their national/international news from the Internet, vs.
35% for newspapers — the first time the Internet has overtaken
newspapers. [Pew Research 2008]
-28% of European Internet users surveyed admitted to reading
newspapers less frequently as a result of the availability of news
online. 62% said they are now turning to the Internet as a main source
of news instead of traditional media. [EIAA Mediascope]

Some common corrections,
-We don’t show entire articles from newspapers. Rather, we show just
enough for users to identify the stories they’re interested in — a
headline, short snippet and a link to the publisher’s site — and we
direct users to those news sites to read the stories
-For Google News, the primary goal is not to generate revenue but to
help users find high-quality information produced by journalists.
While connecting users to news is an important service, the money we
make from ads that accompany search queries related to news and
current events accounts for only a tiny fraction of our overall search
revenue.
-Newspapers have been suffering from both declining circulation and
declining ad revenue. Paid circulation as a fraction of the population
is now about half what it was in 1960, and advertisers are finding
lots of other ways — including TV and the Internet — to find
targeted audiences. So far, online advertising hasn’t come close to
offsetting the plunging revenue from newspapers’ print business; in
the U.S., it still comprises only 5% of their revenue. It’s a painful
transition period, but we’re working with newspapers and news
publishers of all kinds on ways to ensure that journalism thrives on
the web.